One key difference often cited between arbitration and litigation is that the former is confidential, writes Sue Lindsey.
Parties can choose arbitration to ensure that the details of their buildings, and how much they paid for them, remain private. But under the Arbitration Act 1996, the parties to an arbitration can resort to the court in certain circumstances. For example, there are limited circumstances in which an arbitration award can be appealed. Once the parties enter the arena of the courtroom, what happens to their confidentiality?
The starting point is an understanding of how the court approaches privacy.
Part 39 of the Civil Procedure Rules (CPR) says that, generally, court hearings are public, but the judge can order otherwise if it is appropriate.
Then there is the question of whether a judgment following a private hearing should be kept from the public.
Courts need very good reasons to hear matters in private and even greater persuasion to keep judgments private, even if both parties want privacy. Justification for this rigorous approach can be found in sources ranging from Jeremy Bentham's dictum that 'publicity is the very soul of justice' to Strasbourg jurisprudence about Article 6(1) of the European Convention on Human Rights (right to a public hearing and public pronouncement of judgment) that 'publicity contributes to the achievement of the aim of Article 6(1)? the guarantee of which is one of the fundamental principles of any democratic society.' CPR Part 62 deals with court hearings relating to arbitrations. The general starting point, which is subject to a contrary decision by the judge, is that hearings about points of law (which tend be of general public interest) will usually be held in public, and other hearings in private.
The Court of Appeal considered what should happen to the judgments in Department of Economics and Development of the City of Moscow v Bankers Trust Company (2004). Bankers challenged an arbitration award. The court hearing about the challenge was in private.
The judgment was handed down and Bankers objected to it being made public. There was another hearing to debate whether the judgment should remain private. The judge, and then the Court of Appeal, decided that it should.
The reasoning was that the courts must recognise that, in enacting the Arbitration Act, Parliament had set out to encourage and facilitate a confidential and consensual system of resolving disputes.
However, that was not a complete answer. There could be no blanket withholding of judgments relating to arbitration just because to do otherwise might upset confidence in the English arbitration system.
When called upon to exercise their supervisory role in relation to arbitrations, courts were not simply an extension of the arbitral process but acting as a branch of the state. So courts have to balance the parties' expectations as to confidentiality with the usual considerations that militate in favour of public judgments.
Allowing public scrutiny of the operation and practice of arbitration is a desirable objective. The courts will try to achieve it by formulating judgments that avoid disclosing significant confidential information.